This is one of the most common myths that family lawyers are required to dispel. Another myth is that property is divided up 50/50 between spouses.
Sometimes a wife may receive a greater share of the property pool than her husband after separation and sometimes a net property pool will be divided equally between the parties. Equality is not however the starting point.
There are no hard and fast rules for percentage divisions on property settlement. Rather, Judges in the Family Court and Federal Circuit Court of Australia have a very wide discretion in making Orders that alter the interests of parties in property.
The Court will not make an Order for property settlement, unless it is just and equitable to do so and it is widely accepted that the four (4) step approach to determining a party’s property entitlements is as follows:-
Identify and value the property of the parties - not only property held by both parties but also any property owned separately by each party. The property is valued as at the date that an agreement is reached or the date of Trial not as at the date of separation.
Consider the contributions of the parties and express these contributions as a percentage of the net value of the property (contributions include the direct and indirect contributions towards the acquisition, conservation of improvement of any matrimonial property, the non-financial contributions of each party to the marriage and the contribution made to the welfare of the family, and any children of the marriage including any contribution of either party as either homemaker or parent).
Identify and assess the other “future needs factors” set out in section 75(2) of the Family Law Act 1975 (Cth) and determine the adjustment (if any) to be made to the contribution elements at Step Two. Some of the factors that are taken into account include:
- Age and health of the parties;
- Resources and employment capacity – this includes the income, property and financial resources of each of the spouses, and the physical and mental capacity of each of them for appropriate gainful employment;
- A party’s care and control of any children under the age of 18 years;
- Necessary commitments – the Court must consider the commitments of each spouse necessary to enable that spouse to support himself or herself and any other person whom they have a duty to maintain;
- Responsibilities to support others – the Court must consider the responsibility of either spouse to support another person;
- Appropriate standards of living – if the spouses have separated, the court must consider what standard of living is reasonable for each spouse in all the circumstances;
- Contributions to income and earning capacity made by either party to the income and earning capacity of the other;
- Length of the relationship;
- The effect of the relationship on earning capacity – the Court must consider the extent to which the marriage has affected the earning capacity of each of the spouses;
- The financial circumstances of cohabitation – if either spouse partner is cohabiting with another person, the court must consider the financial circumstances of the cohabitation.
- Other factors and circumstances that the justice of the case requires to be taken into account.
Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
The Court must look at each case on its individual facts and circumstances and decide how much weight to place on each factor and what adjustment should be made (if any) in a party’s favour.
It is impossible for anyone to predict with absolute accuracy what the outcome of any property settlement proceedings will be. In any matter, there will be a range of possible outcomes that will be considered to be "just and equitable" and one particular Judge's view may differ slightly from that of another. Nevertheless, neither view may be considered wrong as long as it is within the range of outcomes considered to be just and equitable.
It is quite possible for a wife to receive a greater share of the property pool if for example, she:
- Made a greater initial contribution, for example she may have owned a house at the commencement of the relationship that was the springboard to further wealth creation;
- Received an inheritance, particularly if that inheritance was received late in the relationship and/or received gifts of significance from family during the marriage;
- Has care and control of young children;
- Is not capable of earning the income or accumulating superannuation that her husband is able to earn or accumulate and will require training to re-skill or gain qualifications to enable her to re-enter the workforce;
- Made significant contributions by way of labour or project management towards the renovation and improvement of real properties;
- Has health issues that impact upon her capacity to earn an income and/or has significant medical expenses to pay;
- Made the greater breadwinner contribution throughout the relationship (in circumstances where neither party made a greater homemaking or parenting contribution);
- Made significant sacrifices in relation to her career and future earning capacity during the marriage for example by ceasing work or reducing her working hours to look after children and/or to support her husband’s career path;
- Receives very little child support from her husband and is unlikely in the future to ever receive significant financial support from her husband for the care of the children;
- Made astute financial decisions that increased the property pool or preserved the pool whilst her husband wasted assets (for example by gambling or engaging in reckless behaviour); or
- Made significant non-financial contributions for example to the care, nurture, and support of a husband with a medical disability.
It will depend on the facts and circumstances of the individual case.
The above is a non-exhaustive list. It simply highlights some of the matters that a Court will take into account in determining a just and equitable division of your property.
The Full Court of the Family Court recently delivered Judgment in an Appeal of a Trial Judge’s decision to award a husband 60% of a property pool worth between $30 million and $39 million.
In Fields and Smith  FamCAFC 57 the Full Court determined that the Trial Judge had erred in awarding an adjustment to the husband for what the Trial Judge had considered to be his "ingenuity and stewardship" of the family construction business.
The Full Court allowed the wife’s appeal and determined that the couple should share their assets equally at the end of their long marriage.
At Hartley Healy we have extensive experience across a broad range of Property Settlement matters and we will be able to guide you and advise you as to the likely range of your entitlements under the Family Law Act and the Orders that a Court may be inclined to make in your particular circumstances.
We can also advise you regarding your rights and obligations in respect to spousal maintenance.
What is Spousal Maintenance?
A party to a marriage is able to institute an Application for Spousal Maintenance against the other party during marriage (although this is rare) or after separation. The obligation arises where one of the parties is unable to meet all of their own reasonable weekly needs from the income which they generate or which they are able to generate. If this is the situation, then an Order can be made against the other spouse in circumstances where that other spouse has a capacity to pay.
It is not an automatic right upon separation. The making of an Order for Spousal Maintenance and the amount which is to be paid under it depends upon the needs of the applicant and the ability of the respondent to pay.
A Court may make interim Orders and final Orders regarding spousal maintenance payments. In certain situations, the Court also has the power to award spousal maintenance in a lump sum, rather than periodic payments.
Maintenance may be ordered for a limited period while a spouse searches for employment or re-trains. Spousal maintenance awards are less likely where each spouse has retained the capacity to earn a living.
The terms of any property settlement received will also have a bearing on the maintenance that a spouse might receive.
Again, the Court will look at the factors set out in section 75(2) of the Family Law Act in determining whether one party is able to adequately support themselves or not. A party may require maintenance because they have the care and control of the children or by reason of age, or physical or mental incapacity and is unable to obtain appropriate gainful employment.
It is important to remember that even if one party is unable to adequately support themselves then the other party is only liable to support that party so far as they are reasonably able to do so.
Usually, there is also an obligation on the Applicant to “mitigate” their loss, i.e. by actively pursuing employment. The Applicant’s need is limited to him or herself and does not include children.
Again the Court has discretion as to the amount of maintenance payable and in determining what is adequate, regard will be taken to the standard of living enjoyed by the Applicant and to which they had become was accustomed during the marriage. Whilst the pre-separation standard of living is not automatically awarded, the Courts will usually ensure that the Applicant has sufficient funds to live in “reasonable comfort”.
The writer is aware of a decision where an interim order was made that the husband pay to the wife $1,350.00 per week by way of spousal maintenance.
The husband was 33 years of age and the wife 29 years of age. The marriage was of two years duration and there was one child, aged 3 years at the time of the hearing. The husband was a sportsman contracted to Australian and overseas organisations and earned a substantial income from numerous commercial sponsorships. The wife did not work and was primary caregiver to the child.
In her Financial Statement, the wife asserted that her reasonable weekly needs were $1,527.00. She was paying approximately $875 per week for rent whilst the Husband continued to reside in the former matrimonial home. The Judicial officer hearing the matter assessed the wife’s reasonable weekly needs (after a slight pruning back of expenses) as $1,350 and made an order for this be paid on a weekly basis pending finalisation of the parties’ property settlement. Regard was had to the standard of living the parties previously enjoyed and concluded that the husband had capacity to pay maintenance.
In the case of Mitchell (1995) FLC 92-601 it was held that:-
“The days are long gone when it is necessary for an applicant for maintenance to use up all of her assets and capital in order to satisfy the requirement that she is unable to support herself adequately. Where the line is drawn will depend on the circumstances of individual cases”.
In the case of Wicklow  FamCA 792, Judicial Registrar Johnston (as he then was) did not consider that the wife’s ownership of shares in her own name worth $110,000 precluded her from being awarded interim spouse maintenance. In that case, the wife sought interim spousal maintenance of $4,264 per month and was ultimately awarded $3,200 per month to meet her reasonable needs.
The parties had three (3) children, two (2) of whom were adults and one (1) aged 17 years at the time of the interim hearing.
The husband had claimed that he did not have capacity to pay maintenance however was found to have an earning capacity as a finance manager of between $200,000 and $300,000 per annum. He could also pay rent on a waterfront unit, fund overseas travel and had “an interest in boating and that obviously comes at a fairly significant cost.”
Judges have excluded as “self-support commitments” sporting club memberships, lotto tickets, money for gifts and donations; but have allowed certain entertainment expenses, holiday costs, cigarettes and alcohol expenses.
Each case is unique and each Judge is unique.
If you would like to seek further clarification of any of the matters raised above, please do not hesitate to contact our office and speak to one of our Accredited Family Law Specialists.